The Mexico Model and Lessons for India’s Agriculture

In the previous two parts of this article (we have published the previous two parts in the previous two issues of Janata Weekly blog – Eds), we saw how

(1) the Government is trying to ram through a conclusive determination of property rights in agricultural land throughout the country. This is being done explicitly in order to develop a “vibrant land market”, i.e., in order to facilitate transfers of land;

(2) for the last 20 years or so, there has been an intensifying drive by international investors to get control of land, including agricultural land, in the Third World;

(3) the penetration of organised retail in the Third World, generally linked to giant transnational retail firms, leads inexorably to the ousting of small peasants; and

(4) the existing crisis of the Indian peasantry under neoliberal rule has created the conditions for small peasants to lose their land, either to large landholders or to corporations. Indeed, when the rulers say they plan to double farmers’ income, they mean that they plan to halve the number of farmers.

What will these changes, if they come to pass, mean for India as a whole?

Advocates of neoliberal policies argue that the pain of these changes is temporary. Farmers may lose their land, but the land will be put to higher-value uses, thus increasing total income. And jobs will be created for workers in agriculture, logistics (procurement, storage and transport), food processing, and retail. ‘In the net’, i.e, after setting losses against gains, they argue, this process will lead to greater prosperity and jobs all round.

This is a travesty of the truth. In fact these changes will wreak a terrible and varied devastation. That devastation will not take place all at once; its effects will differ across regions, sectors, castes, genders, and communities, in this, the world’s most stratified society. At first, most who are affected will not realize the interconnections between their own fate and that of others similarly affected; why they are ripped from their tenuous but familiar subsistence and cast on the open waters, as so much flotsam and jetsam; how different sections of working people, though strangers to them, are facing the same confusion and misery; and which classes are responsible for the social calamity. And so, which classes they must join hands with in order to resist the attack.

It is all the more necessary, therefore, to make people aware of these very concrete facts and interconnections.

* * *

India in the mirror of Mexico

In order to understand what is happening to us, we can look at other countries which have suffered the same fate, some years in advance of us. Among major Third World economies, Mexico has traveled perhaps the furthest down the path of neoliberal globalisation. The model being adopted in India today is similar to that imposed on Mexican agriculture since the onset of IMF-dictated ‘reforms’ in the 1980s; and more particularly since 1994, when the North American Free Trade Agreement (NAFTA) was signed between the United States, Canada, and Mexico. From Mexico’s recent history, we can see the connection between the overall agricultural policies imposed by imperialism, on the one hand, and the Third World peasantry’s loss of land, on the other:

• the drive to create an “active land market”, by formalising property titles for rural land and making land into a tradable commodity, as preparation for taking away the land of the peasant;
• the dismantling of Third World public sector institutions in the grain trading sector;
• the displacement of Third World production of staple foods, necessary for household and national food security;
• the surge in grain imports from the imperialist countries, rendering the country vulnerable to food crises synchronised with global crises;
• the domination of a handful of giant corporations in domestic food retail trade;
• the loss of social control on the prices of staple foods;
• the reorientation of a section of agriculture to growing ‘high-value’ produce for export and for the domestic elite of the Third World country;
• the growth of unemployment due to the displacement of small peasants from the land; the inability of the new export sectors in agriculture and industry to absorb more than a fraction of the displaced peasants;
• the depression of wages due to the swelling ‘reserve army’ of labourers (i.e., the growing numbers of unemployed);
• the growth of poverty and desperation among the labouring classes.

Below we elaborate these points.

* * *

According to the textbook theory of international trade, each country should focus on producing goods in which it has ‘comparative advantage’, i.e. goods it produces more cheaply than it produces other goods.[1] It should import other goods, in which its workers’ productivity is relatively lower. In this way, according to the theory, it will gain more than if it were to try to produce all goods. And all countries will maximise their gains by following this rule.

Under the tutelage of the United States and international institutions (the IMF, World Bank, etc), Mexico’s rulers embraced the textbook theory with extraordinary zeal, going even beyond their treaty commitments in opening the country to imports.

However, which partner benefits from trade between two countries is basically determined not by the comparative costs model, which is purely hypothetical, but by the stage of development of each of the two economies involved and the consequent relationship between the two.[2] This relationship enables an imperialist country to exploit a dominated country through the channel of trade (apart from investment). Further, the US has historically exercised, and continues to exercise, political and economic domination over Mexico. As a result, rather than both countries prospering through trade, the US has derived extraordinary gains, while Mexico has, in a sense, gone backward. The experience of Mexico’s agricultural restructuring in the last three decades bears this out.

In the course of our narration, we will repeatedly make clear the relevance of Mexico’s experience to the current experience of India.

Corn and land

The story of Mexico’s agriculture can be organised around two threads: corn and land.

What we consume today as corn (maize) is not the product of nature alone; it is equally the product of thousands of years of labour of farmers indigenous to what is now Mexico, working with nature. About 9,000-10,000 years ago they began choosing kernels of a wild plant to plant, eventually making it their staple food. As they preserved seeds from their own crops and exchanged seeds with neighbours, they developed a vast range of varieties with different properties. This unique genetic treasury of Mexico’s corn varieties is the source even today required to develop new varieties for different requirements. “US producers are actually the indirect beneficiaries of Mexican farmers’ stewardship, since their high-yield hybrids are derived from the varieties that originated in Mexico’s fields”.[3]

So central was corn to their existence that the Aztecs worshipped a corn god, Centeotl. In ancient Mayan mythology man’s flesh was made from corn dough. Corn, in the form of ‘tortilla’ (cooked corn dough) provides about 59 per cent of human energy intake and 39 per cent of protein intake in Mexico.[4]

When the Spanish conquerer Cortes defeated the Aztecs in 1521 and brought Mexico under Spanish rule, he granted himself and his lieutenants vast plantation franchises. The remaining regions of the indigenous peoples, however, were brought directly under the Spanish crown. Indigenous land rights survived in these regions, with the indigenous communities paying the Spanish crown the tribute they had earlier been giving the Aztec Emperor. In 1810, when the Mexican people waged a War of Independence against Spain, the indigenous Mexican peoples participated with the aim of regaining their land; their hope was not fulfilled. Instead, with the 1857 Mexican Constitution, the indigenous land system was abolished, and indigenous peoples were dispossessed of most of their remaining lands. By 1910, just 300 families owned 70 per cent of the land.

It was in 1910 that the Mexican peasantry waged an armed revolt. The most steadfast contingent was led by the revolutionary Emiliano Zapata, who fought “so that the people will have lands, forests and water.”[5] (or, as we say in India, jal-jangal-jamin).

The revolution of 1910-20 was the defining event of modern Mexico. The Constitution of 1917, which emerged from the revolution, enabled both land reform and the expropriation of foreign ownership of resources such as oil. It declared all land, water and mineral rights to be the property of the people of Mexico.[6]

The actual process of dismantling the great estates (haciendas) and distributing land among the landless poor stretched out across many decades. By 1992, the rulers had distributed 103 million hectares (56 per cent of its agrarian land and 70 per cent of its forests) to over 30,000 ‘ejidos’, or agrarian communities, consisting of 3.5 million ejidatorios, or agrarian households. [7]

These lands were of three types: individual holdings, common property resources (such as forests), and house plots. Land was a social right, and not a commodity: The households and communities had the use of the land and its fruits, but these land rights were non-transferable and inalienable, i.e., the land could not be sold.[8] In this way, Mexico in effect restored an indigenous form of land tenure which existed prior to Spanish conquest.[9] Despite this long history of land distribution, land reform remained an unfinished agenda, with a small number of private owners continuing to hold large estates, and sizeable numbers of landless peasants petitioning for land.[10]

About 60 per cent of Mexico’s farmland was under corn; within this, four-fifths was rainfed. About half the ejidatorios were purely subsistence farmers, and met their cash requirements by labouring elsewhere for part of the year. The other half of the ejidatorios sold their small surplus of grains in the market to meet their cash requirements. [11] Evidently they were not fit for the neoliberal restructuring into which they were thrust.

Mexico’s neoliberal era began in 1982, when the US central bank deliberately brought about a sharp rise in interest rates, triggering a steep global recession. This step effectively smashed both the strength of the US’s own working class and the strength of producers of raw materials in the Third World. Mexico was the first of many Third World countries to plunge into a debt crisis, as the value of its oil exports shrank and interest rates on foreign borrowings soared. After 1982, Mexico was forced to implement ‘structural adjustment’ spelled out by the US and the IMF.

This was a turning point for the Mexican economy, much as 1991 was for India. It spelled doom for both those extraordinary achievements of the peasants of Mexico, the development of corn over millennia, and the land reform of the 20th century.

Creating an “active land market”

In 1990 the World Bank drafted an agricultural policy document which called for converting ejidal property into private property. In 1991-92 the Mexican government changed the agrarian law and amended its Constitution to allow, even promote, the privatization of ejidal land. (In a sense, this was the revival of the 1857 Constitution, and that earlier dispossession of the indigenous peoples.[12]) Mexico’s neoliberal rulers, ardent pupils of Washington, claimed that the existing agrarian law prevented the efficient allocation of resources; their aim was to create an active land market.[13] This is echoed by the international agencies and the Indian rulers when they talk of creating a “vibrant land sales market” in India, as discussed in the previous instalment of this article.

The explicit aim of this so-called “second land reform” was to change the character of Mexico’s agriculture, by shifting it from growing staple grains for domestic consumption to growing fruits and vegetables for export to the United States. According to neoliberal proponents of this measure, “As it became imperative for the Mexican agricultural sector to prepare for competition with its trading partners, improving property rights in the ejido sector was seen as essential for this purpose…. areas that mostly grow crops such as corn and beans that have traditionally been strongly supported by the state… may expect losses in support with the pro-market policies of the right. By contrast, areas growing crops that are left to market forces (such as export fruits and vegetables) have more to gain from complete property rights if they are accompanied by pro-market policies.”[14]

The new law: (1) formally ended the 75-year-long land redistribution programme; (2) established a national programme to provide rural households with certificates of ownership over their land parcels; (3) allowed sale to other members of the ejido, and renting to external parties; (4) laid down a process for effectively converting the land into private property; and (5) created a national rural land registry that could track subsequent changes in ownership.[15] This programme was rolled out nationwide over 1992-2006. The new law opened the ejidal sector to foreign direct investment, and allowed even forest ejidos to hand over control to private commercial planters. It has also given rise to a large number of disputes over property, since boundaries and rights had hitherto been governed by customary law and practices.[16]

Unlike Mexico, India never underwent significant land reform. Nevertheless, its current programme of ‘conclusive titling’ of land bears clear resemblances to Mexico’s post-1992 drive to hand over property rights to ejidos. The Indian rulers are closely following the script followed by Mexico, written in Washington.

Winding up Mexico’s public sector grain trading corporation and other support for agriculture

i) Before 1994, the main instrument of Mexican government policies in agriculture was the public sector giant National Company for Popular Subsistence (CONASUPO). Its two broad objectives were to promote the international and domestic trade in agricultural products, and to guarantee the livelihoods of low-income farmers.

After the 1982 debt crisis, the Mexican government began shrinking CONASUPO, but it continued to have a significant role. Then, in 1994, the government eliminated CONASUPO’s domestic price support for corn and income support programmes for farmers. Whereas CONASUPO’s income support was transmitted through prices, quotas and subsidized inputs and services, now the government paid support to farmers in the form of direct transfers through a new body, PROCAMPO. Mexico’s scheme of ‘targeted’ food subsidy, consisting initially of a low selling price and subsequently of a free kilogram of tortillas daily for poor urban families, was also finally abolished in 1998. Finally, CONASUPO was wound up in 1999. [17]

This process bears a close resemblance to the Shanta Kumar Committee’s plan to wind up the Food Corporation of India and replace it with direct payments to farmers and consumers.

ii) During the early 1990s, the Mexican government also dismantled the rural credit bank that mainly financed peasant or agrarian reform land; the public sector fertilizer and seed industry; and extension services provided by the Ministry of Agriculture.[18]

The World Bank in 1991 recommended a similar path for India, but implementation here was slower: public sector bank credit to agriculture shrank as a percentage of total lending, but was not wound up; prices of some fertilisers – phosphate and potassium – were decontrolled, but subsidies on nitrogen continued; and public sector extension services were nearly wound up, but were partially revived in the mid-2000s.

iii) PROCAMPO’s direct cash transfers to peasants were meant to help them ‘adjust’ to the withdrawal of CONASUPO support, and to the flood of cheap imports. However, these transfers did not keep pace with inflation, and hence quickly lost 40 per cent of their value.

In December 2018, the Modi government instituted the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan Yojana), which is meant to transfer Rs 6,000 per year, in three instalments, as ‘minimum income support’ to 125 million farmers who own two or less hectares of cultivable land. This scheme, initiated just before the 2019 general elections, was trumpeted as a generous gift to farmers. But it is in fact a preparation for the winding up of major support to agriculture (such as public procurement, fertiliser subsidy, low tariffs for electricity, and lower interest rates on bank credit). This was explicitly stated in the IMF Staff Report regarding India in October 2019 (details in footnote).[19] Over the medium term, PM-KISAN will play the same role as PROCAMPO, namely, to provide political cover to dismantling of all State support to agriculture. That the Indian government too views PM-KISAN as a method of eliminating such support was made clear by India’s representative at the IMF (details in footnote).[20]

Promoting subsidized US corn imports, displacing domestic corn growers

In 1994, at the time of the signing of the NAFTA accord between the US, Canada and Mexico, the Mexican president Carlos Salinas went beyond Mexico’s treaty commitments and entirely set aside tariffs on corn and beans (the two staples of the Mexican diet). This immediately exposed Mexico’s domestic market to imports from the US.[21]

It should be noted that despite the fact that US farm yields are much higher than Mexico’s, the US heavily subsidizes its agricultural sector. It is thus able to export agricultural goods to Mexico at ‘dumping’ prices, at 12-38 per cent below its own cost of production (corn was exported to Mexico at 19 per cent below the cost of production).[22] This resulted in corn imports rising to four times the pre-NAFTA level; the share of corn imports in domestic consumption tripled between 1994 and 2008, and reached a third of domestic consumption. There was a massive growth of other agricultural imports from the US as well – grains, cotton, meat, and dairy.[23]

Subsidized imports led to a collapse in the prices received by Mexican peasants. Between 1997 and 2005, prices paid to farmers for various crops fell by half to two-thirds; in the case of corn, the fall was two-thirds.[24] The decline in the prices of corn and beans was sharper than for any other commodity, and most acute in the poorest, most agriculture-dependent regions (where the share of indigenous population is largest). A section of small and poor peasants managed to survive by finding ways to increase their production, but the more prices fell, the more they had to sell to finance their non-food consumption needs. According to one scholar, “Sometimes they have to forgo even basic food consumption.”[25]

The terms of trade – the ratio between the prices paid for manufactured goods by the rural population, and the prices domestic agricultural producers received for their produce – declined between 1986 and 2010 nearly 53 per cent.[26] This measure includes all agricultural produce; the ratio would be far worse for corn or bean producers.

The strategy of the World Bank and the Mexican rulers was to shift Mexican agriculture to growing ‘high-value’ crops such as fruit and vegetables for the US market (in 2010 the US absorbed 85 per cent of Mexico’s exports and provided 70 per cent of its imports). Indeed the new agricultural strategy did result in a rise in exports of fruits and vegetables from the northern states of Mexico.

At the same time, however, imports of corn, wheat, beans, cotton, poultry, and dairy products from the US grew more rapidly. As a result, Mexico ran an increasing trade deficit in food and agricultural raw material. This diverted billions of dollars of domestic demand away from domestic farmers and to the US.[27] Further, the Mexican government systematically depressed domestic agriculture by shrinking all programmes for agricultural development by 78 per cent (in real, inflation-adjusted, terms) between 1994 and 2009.[28]

India has had a similar experience with edible oilseeds. From a position of self-reliance in the early 1990s, India now imports 70 per cent of its edible oils. In the decade 2010-20, India spent nearly $97 billion on importing edible oils – diverting this demand from its own farmers.[29] Now India is on the verge of making similar changes in its foodgrain economy, particularly for wheat.

Despite the collapse in producer prices for corn, prices for consumers did not fall, but rose, for two reasons: the Mexican government eliminated consumer subsidies, and private trade was now in the hands of two giant firms, which pocketed the margins from the price collapse.[30] (The single largest firm is a partner of, and partly owned by, the US grain trading giant Archer-Daniels-Midland.[31]) As a result, it is estimated that tortilla prices were one-third higher than pre-NAFTA, even after accounting for the rise in the general price level.

Further, Mexico’s dependence on imports of basic staples from the US meant that every international crisis became a food crisis for Mexico.

Consequences of shift to fruit and vegetable exports

As mentioned earlier, even as the Mexican rulers devastated the grain sector by opening it to subsidized imports, they promoted the growth of fruits and vegetables (F&V) for export markets. In effect the land devoted to the nutritional requirements of Mexicans shrank, and the land devoted to the consumption of their neighbour to the North expanded.

The area under F&V expanded, and exports expanded from 2.2 million tonnes in 1990-94 (i.e., pre-NAFTA) to 7.3 million tonnes in 2010-13. As a percentage of domestic production, exports of F&V rose from 4 per cent in the former period to 18 per cent in the latter. In specific fruits and vegetables the figure was much higher – over half of the production of cucumbers, water melons and tomatoes was exported.[32] Much of this was carried out on large commercial farms by US corporations. In 2017, Mexico exported $5.5 billion worth of fresh vegetables and $6.0 billion in fresh fruit to the US market.[33]

Indeed, the United States is virtually the only destination for Mexican F & V exports. “Thus, any price drop, non-tariff-based regulation imposed by the Departments of Agriculture, Health, or Commerce, or sounding of a sanitary alarm, can have catastrophic effects on agro-industrial producers, the economy, and employment in [Mexico’s] agro-exporting regions where the monocrop contributes the lion’s share of the value of production and agricultural employment.”[34]

F & V production by transnational corporations has captured land with the best water resources, in some cases exhausting underground aquifers. The system of industrial mono-cropping practised by these firms resulted in other heavy environmental costs too in the form of increased pest resistance, depletion of the soil, and contamination of the water and soil. When these firms realize “that environmental degradation is raising production costs and diminishing return on investment, or that they are being subjected to regulations by local producer organizations on production dates or access to water, for example, that restrict their investment schedules, their response is a very simple one: pull up stakes and transport their operations to ‘virgin’ areas that are free of all such limitations. Once established there, they simply re-initiate production of the crop that interests them on the scale and at the time of year most convenient for them with the same disregard as in the previous area.”[35]

Balance sheet of the restructuring: employment, wages, poverty

As a result of this restructuring of Mexico’s agriculture, net employment in agriculture fell by almost one-fifth between the pre- and post-NAFTA periods.[36] To say “net” employment fell obscures a grimmer reality. When a person is thrown out of a settled livelihood and community and finds some sort of wage work on any terms, there may be no “net” change in employment, but the upheaval and distress exacts a human toll. In Mexico, employment on family-owned farms fell 58 per cent (from 8.4 million to 3.5 million), and seasonal wage work in agro-export industries rose from 1.9 million to 4.7 million. Net employment in agriculture thus fell 1.9 million.[37]

Official statistics in Mexico severely understate the real scale of unemployment.[38] Nevertheless, even by these data, the average unemployment rate during 1994-2016 was considerably higher than the rate for 1990-94. The number of unemployed rose by almost 1 million between 1993 and 2016.

The massive displacement of workers from agriculture swelled the ‘reserve army’ of those available for wage work. This expansion of the reserve army depressed wages. Thus there was effectively no increase in real average wages throughout the period 1994-2014. The situation of many workers was much grimmer, as the minimum wage fell 19.3 per cent between 1994 and 2015.[39] The reality may be worse than this, because family farms provide household food security and other forms of non-monetary subsistence which those who lose their lands would no longer obtain.

The displaced peasants provided a cheap labour force for the maquiladoras, the tariff-free export-processing firms (similar to India’s Special Economic Zones). A leading scholar of NAFTA concludes that the objective of the restructuring of Mexico’s agriculture was “drastically to reduce the rural population and channel its surplus labour power to low cost export oriented maquiladora manufacturing and assembly units for American TNCs [transnational corporations].”[40] After NAFTA, exports from these factories rose to about half of Mexico’s total exports. Employment in the maquiladoras rose by about 700,000 between 1994 and 2006, but this would have absorbed only a fraction of the displaced peasants from Mexico’s poverty-stricken south.

These displaced millions of workers desperately tried to find employment in the US, braving all sorts of hazards and leading an illegal existence across the border, often separated from their families. “From 1994 to 2000, the annual number of Mexicans emigrating to the United States soared by 79 percent. The number of Mexican-born residents living in the United States more than doubled from 4.5 million in 1990 to 9.4 million in 2000, and peaked at 12.6 million in 2009.”[41]

If these Mexican workers had not been able to emigrate to the US, what would have happened to the unemployment rate in Mexico?

• Between 1994 and 2010, Mexico’s labour force (i.e., those employed plus those actively seeking work) grew by 15.7 million.
• In the same period, we estimate that at least 5.7 million workers immigrating from Mexico (through legal and unauthorized routes) became part of the US labour force.
• If, instead, these 5.7 million workers had remained trapped in Mexico, they would have added to the labour force there. However, since there would not be jobs for these additional workers, the unemployment rate (the number of unemployed divided by labour force) would have soared. [41a]

The growth in the reserve army of labour would have further depressed wages.

Remittances from Mexican immigrants into the US exceed $20 billion, making it a larger source of foreign exchange than foreign direct investment.

When we compare Mexico’s situation to India’s, we must remember that this ‘escape route’ will not exist for India’s peasants displaced from agriculture, and hence the unemployment here will be that much worse.

Despite the escape route of emigration and the benefits of remittance income, poverty in Mexico (by the Mexican national definition) rose between 1994 and 2014, to 55 per cent. As a result, there were 20.5 million more Mexicans living below the poverty line of 2014 than in 1994. More than one in five Mexicans is unable to afford adequate food itself – a telling comment on Mexico’s entire agricultural strategy.[42]

At the time of signing NAFTA, Mexico’s rulers peddled the idea that, by integrating the Mexican economy with that of the US, Mexico’s worker productivity and incomes would converge with those of the US. This was based on false economic theory, and in fact the opposite has occurred: “the data show that there has been no economic convergence whatsoever between Mexico and the United States since NAFTA’s enactment.” Mexico’s output per worker fell as a ratio of US output per worker, and Mexico’s GDP per capita fell slightly as a ratio of the US figure.[43] Mexico’s performance in poverty reduction and GDP growth is now near the bottom for Latin America.[44]

Winners and land-losers in the rural areas

Not all classes were losers from this process: in the rural areas, the income share of the poorest sections fell, and that of the wealthier sections rose. The concentration of income and of land rose.

The United States and Mexico’s rulers have partly succeeded in their aim of parting Mexico’s peasants from their land. The share of rural families with no means of agricultural production doubled from 35 per cent to 74 per cent.[45] While rising unrest in the 2000s caused the government to take some token measures to protect peasants, by then “many marginal farmers had already been driven from their plots.”[46]

Case studies show that “the purchase and sale of land has increased substantially with the constitutional changes. The buyers who make the land market dynamic are local caciques, private hoarders that make up an elite of ejidatarios. In some cases, interest by external agents for renting community or ejido land foments the interest of the local elites in purchasing land in order to rent it out to such external agents, who are interested in establishing plantation crops.”[47]

To summarise the findings of these studies:

1. The land market is dispossessing peasants of their lands, whether through rent or sale. Local and external elites are gaining control over the best ejidal and private lands of rural communities, while and increasing number of peasants are losing access to the land.
2. The land market destroys the sense of territoriality in the communities. Whether the market is used for renting or purchasing land, the community loses the physical space necessary for its social reproduction. As a result the youth who have lost their access to land are forced to migrate.
3. Peasants do not part with their land voluntarily, to make a profit or obtain a benefit. Rather, poor ejidatarios are forced by circumstances to sell or rent their land when they have to incur emergency expenditures. Ejidatario elites take advantage of an emergency to buy at low rates.[48]

Resisting these forces, poor peasants have clung on to their land as long as they can. “[D]espite policy efforts to separate the smallholder from the logic and culture of maize farming in Mexico, smallholder sellers and nonsellers of maize persist.”[49] They have made efforts to improve their yields and the volume of their production; however, the fall in crop prices far outstripped the rise in production. Thus their incomes still fell.

Yet, against all predictions, a sizeable part of rainfed corn production survived. One scholar calls the increase in corn production a “retreat to subsistence”, whereby, even if poor farmers are unable to buy other goods through the sale of produce, they are at least able to eat.[50]

Did productive forces develop?

It is conventionally assumed that, whatever the upheavals and pain of what the rulers call ‘adjustment’, whatever the displacement, alienation, emotional stress, lives wasted or lost, the outcome is at least a ‘higher’ stage of development, an advance of productive forces, which can potentially yield greater prosperity for all at some point in the future. Did the post-1994 restructuring result in an advance of productive forces in Mexico’s agricultural sector as a whole? No.

(1) There was an entirely predictable, and indeed intended, collapse in the terms of trade for traditional agriculture. This prevented poor peasants from carrying out investment in traditional farming, which at any rate Mexico’s rulers did not want them to do (they wanted peasants to simply get out of farming and stand in line for maquiladora jobs).

Contrary to the conventional notion that competition induces less efficient producers to improve their productivity, the dumping of State-subsidized imports of corn, beans, wheat and other such goods from the US simply displaced millions of Mexican producers without bringing about any increase in efficiency.

(2) There was some growth in productivity in new ‘high-value’ production of fruits and vegetables, that is, production per acre and per worker increased. However, income, employment and growth in this sector fell far short of the promise. Among the possible reasons:

• The market in the US could not limitlessly expand to absorb Mexican fruits and vegetables. The increased exports from Mexico “satiated the US market long before they created enough opportunities to draw significant labour from corn cultivation.”[51]
• Secondly, the US signed trade agreements with several other developing countries exporting the same goods, and the growing world supply would drag down the prices for all of them.[52] The competing Third World exporters are trapped in what is known as a “race to the bottom.”

Both these reasons were inherent in the situation at the time of NAFTA. They would certainly have been foreseen by the principal architects of that agreement, the US corporate sector.

There is an important implication in this for India: regardless whether or not it is desirable for India to orient agricultural production toward export of fruits and vegetables, it is not possible for this activity to absorb the bulk of peasants or land. If the rulers’ agricultural strategy exposes the remaining peasants to competition with imports, it will simply devastate one sector without creating any alternative.

(3) The low returns in agriculture resulted in low investment. This in turn resulted in stagnating productivity per person employed in agriculture, and stagnating or falling production per inhabitant.[53]

(4) Two critical productive forces have been crippled or wasted: The environmental effects of the present pattern of farming have taken a long-term toll on the productivity of the land; and labour power has been displaced without being absorbed elsewhere.

All these signify that Mexico’s agricultural strategy actually brought about a decline in productive forces. Nor should we expect otherwise when the same strategy is implemented in India.

The alternative course, and who can pursue it

Instead, Mexico could have addressed considerable unfinished agenda of land reform; supported investment by small producers of crops for domestic consumption; strengthened their forms of association in order to enable investment through collective labour; strengthened distribution networks to enable them to get better returns on the portion of the crop they sold; and helped them to diversify their activities on their existing lands. Domestic food security would have a primary role, with production for export given a secondary role. All this would be possible only in an overall economic strategy of democratic national development. Such a course is ruled out by the present social and economic order; it can only be achieved through the struggles of the people, whether in Mexico or in India.

On January 1, 1994, in protest against NAFTA’s coming into effect, the indigenous people of the southern Mexican state of Chiapas, under the leadership of the Zapatista Army of National Liberation (EZLN), staged a 12-day armed occupation of major towns in the state. The uprising sparked direct action and protests elsewhere in Mexico as well, so much so that an internal report of the US bank Chase in 1995 argued that it was “essential, from the investor point-of-view, to resolve the Chiapas issue as quickly as possible…. The government will have to eliminate the Zapatistas to demonstrate their effective control of the national territory and security policy.”[54]

India’s peasants have not staged an uprising, but a peaceful movement; yet foreign investors will similarly be examining whether the Modi government is capable of “demonstrating effective control” and implementing pro-foreign investor measures. To date, whatever the ups and downs of particular organisations of the people, neither Mexico’s rulers nor India’s rulers have been able to “eliminate” the strivings and struggles of the peasantry for their land and a democratic order.

Notes

[1] That is, goods in which its productivity per worker is greater than in producing other goods.

[2] Within this frame, the character of the State power matters too; it determines whether the country is able to formulate its policy independent of imperialism.

[3] Alejandro Nadal and Timothy A. Wise, “The Environmental Costs of Agricultural Trade Liberalization: Mexico-US Maize Trade under NAFTA”, Working Group on Development and Environment in the Americas, June 2004.

[4] Ibid.

[5] Kelly, James J. “Article 27 and Mexican Land Reform: The Legacy of Zapata’s Dream”, Columbia Human Rights Law Review, 541 (1993-1994), https://scholarship.law.nd.edu/law_faculty_scholarship/668

[6] Article 27 of the Mexican Constitution states that “[o]wnership of the lands and waters within the boundaries of the national territory is vested originally in the Nation, which has had, and has the right to transfer title thereof to private persons, thereby constituting private property.” Further: “The Nation shall have at all times the right to impose on private property such limitations as the public interest may demand as well as the right to regulate the development of natural resources, which are susceptible of appropriation, in order to conserve them and equitably to distribute the public wealth. For this purpose necessary measures shall be taken to divide large landed estates; to develop small landed holdings; to establish new centers of population with such lands and waters as may be indispensable to them; to encourage agriculture and to prevent the destruction of natural resources, and to protect property from damage detrimental to society. Settlements, hamlets situated on private property and communes which lack land or water or do not possess them in sufficient quantities for their needs shall have the right to be provided with them from the adjoining properties, always having due regard for small landholdings. Wherefore all grants of lands made up to the present time under the decree of January 6, 1915, are confirmed. Private property acquired for the said purposes shall be considered as taken for public utility.” Kelly, op. cit.

[7] de Ita, Ana “Land Concentration in Mexico after PROCEDE”, Promised Land: Competing Visions of Agrarian Reform, ed. Peter Rosset, Raj Patel, and Michael Courville, 2006

[8] Ibid.

[9] Kelly, op. cit. It is important not to idealise the pre-1992 land system. As Kelly points out, ejidatorios remained subject to local political bosses and a corrupt bureaucracy. However, the solution for this was greater democratisation, not privatisation, as actually occurred.

[10] Puyana, Alicia, “Mexican Agriculture and NAFTA: A 20-Year Balance Sheet”, Review of Agrarian Studies, 2(1), 2012.

[11] Clarkson, Stephen, Does North America Exist? Governing the Continent after NAFTA and 9/11, 2008.

[12] Kelly, op. cit.

[13] de Ita, op. cit.

[14] de Janvry, Alain, Marco Gonzalez-Navarro, Elisabeth Sadoulet, “Are land reforms granting complete property rights politically risky? Electoral outcomes of Mexico’s certification program”, Journal of Development Economics, vol. 110, September 2014.

[15] de Janvry et al., op. cit.

[16] de Ita, op. cit.

[17] UNCTAD, Mexico’s Agriculture Development: Perspectives and Outlook, pp. 50-51.

[18] Appendini, Kirsten, “Tracing the Maize-Tortilla Chain”, UN Chronicle, https://www.un.org/en/chronicle/article/tracing-maize-tortilla-chain

[19] “[IMF] staff sees no scope to provide fiscal stimulus at this juncture… Staff recommends a more ambitious medium-term consolidation path [i.e., reduction of Government expenditure to bring down the fiscal deficit]…. Fiscal consolidation would be anchored by the following elements: A gradual reduction of subsidy spending on food, fuel, and fertilizers, the need for which is lessened by increased economically-less-distortionary direct-benefit-transfers to farmers, including through PM KISAN.” International Monetary Fund, “India: Staff Report for the 2019 Article IV Consultation, October 16, 2019.

[20] “The authorities welcome the staff suggestion of targeting subsidy support by way of direct-benefit-transfer (DBT) beneficiaries as in the case of PM-KISAN support to small and marginal farmers.” – Statement by Surjit Bhalla, Executive Director for India at the IMF, November 25, 2019.

[21] What explains this haste? Mexico suffered a foreign exchange crisis in 1994, and the value of the Mexican currency, the peso, collapsed. Clarkson argues that “Salinas needed to increase foreign direct investment [FDI] flows. What better way to show his commitment to the new spirit of NAFTA than by foregoing his right to impose tariffs on… US corn exports?” He points out that “the Mexican government became more responsive to the need for FDI and foreign exchange than to its own rural constituency.” — Clarkson, op. cit., pp. 224, 227.

[22] Wise, Timothy A., “NAFTA’s Rural Legacy: Dumping, Displacement, and Dependency”, December 16, 2019, https://tawise01.medium.com/naftas-rural-legacy-dumping-displacement-and-dependency-291dc37969f7

[23] Ibid.

[24] Ibid.

[25] Puyana, op. cit.

[26] Ibid.

[27] Ibid.

[28] Ibid.

[29] RUPE, “When Multinational Grain Traders Told an Official Committee Why They Wanted the FCI To Be Wound up”, https://rupeindia.wordpress.com/2021/01/10/when-multinational-grain-traders-told-an-official-committee-why-they-wanted-the-fci-to-be-wound-up/

[30] Meanwhile government subsidies to the two largest firms actually increased. “The government was subsidizing two firms which acted as a cartel, extracting monopoly profits”, says Clarkson, op. cit., p. 226.

[31] United States Securities and Exchange Commission, Gruma S.A.B. de C.V., https://www.sec.gov/Archives/edgar/data/1053947/000110465912030664/a12-10023_120f.htm

[32] Gonzalez, Humberto, “What socioenvironmental impacts did 35 years of export agriculture have in Mexico? (1980–2014): A transnational agri‐food field analysis”, Journal of Agrarian Change, September 2019.

[33] Wise, op. cit.

[34] González, Humberto, “Specialization on a global scale and agrifood vulnerability: 30 years of export agriculture in Mexico”, Development Studies Research, 1:1, 2014.

[35] Ibid.

[36] Weisbrot, Mark, Lara Merling, Vitor Mello, Stephan Lefebvre, and Joseph Sammut, “Did NAFTA Help Mexico? An Update After 23 Years”, Center for Economic and Policy Research, Washington, updated 2017. The data cited are from the Census years of 1991(pre-NAFTA) and 2007 (post-NAFTA).

[37] Ibid.

[38] To be considered unemployed, a person should not have worked even one hour in paid activity during the reference period of the survey; and should have been actively looking for work. Ibid.

[39] Ibid.

[40] Clarkson, op. cit., p. 221.

[41] Weisbrot et al., op. cit.

[41a] Data for labour force of Mexico from World Bank Databank https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=MX. Emigration from Mexico to the US 1994-2010, by both legal and unauthorized routes, was a total of 8.2 million; see Passel, Jeffrey, D’Vera Cohn, and Ana González-Barrera, “Net Migration from Mexico Falls to Zero — and Perhaps Less.” Pew Hispanic Center, Pew Research Center, 2012. http://www.pewhispanic.org/2012/04/23/net-migration-from-mexico-falls-to-zero-and-perhaps-less/ The labour force participation rate of Mexico-born immigrants in the US at 69.9 per cent: see https://www.pewresearch.org/wp-content/uploads/sites/5/2012/04/A-Statistical-Profile-of-Mexican-Immigrants-in-the-US_final.pdf On this basis, of the 8.2 million immigrants, 5.7 million would have joined the US labour force. However, the labour force participation rate of recent immigrants might be even higher, since many would have left children and the elderly members of their families behind in Mexico.

[42] Ibid.

[43] Blecker, Robert A. and Gerardo Esquivel, “NAFTA, Trade, and Development”, CESifo Forum, ifo Institute – Leibniz Institute for Economic Research at the University of Munich, December 2010.

[44] Weisbrot et al., op. cit.

[45] Puyana, op. cit.

[46] Clarkson, op. cit., p. 227.

[47] de Ita, op. cit.

[48] Ibid.

[49] Eakin, Hallie, Hugo Perales, Kirsten Appendini and Stuart Sweeney, “Selling Maize in Mexico: The Persistence of Peasant Farming in an Era of Global Markets”, Development and Change 45(1), International Institute of Social Studies, 2014.

[50] Wise, op. cit.

[51] Clarkson, op. cit., p. 225.

[52] Puyana, op. cit.

[53] Ibid.

[54] Silverstein, Kenneth and Alexander Cockburn, “Major U.S. Bank Urges Zapatista Wipe-Out: ‘A litmus test for Mexico’s stability’”, Counterpunch, February 1, 1995. http://www.hartford-hwp.com/archives/46/025.html

(Research Unit for Political Economy is a trust based in Mumbai that brings out material seeking to explain day-to-day issues of Indian economic life in simple terms and link them with the nature of the country’s political economy.)